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An accountant has analyzed a firm's Kshs. 100,000 accounts receivable and determined the following: State Amount State 1(S1) Amount paid in full 45,000 State 2(S2)

An accountant has analyzed a firm's Kshs. 100,000 accounts receivable and determined the following: State Amount State 1(S1) Amount paid in full 45,000 State 2(S2) bad debt 15,000 State 3(S3) current debts 25,000 State 4 (S4) over debts 15,000 The historical data have been collected and the fllowing matrix of transition probabilities specified: 1 2 3 4 T = 1 1 0 0 0 2 0 1 0 0 3 0.5 0.2 0.1 0.2 4 0.4 0.4 0.1 0.1 Required: a) The proportions of absorption b) The amount of money that will eventually end up as paid in full or bad debts

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